China is considering adding FedEx Corp. to a list of so-called unreliable entities, said people familiar with the matter, a move that would escalate tensions with the U.S.
Authorities in China have almost completed the preparations that would be needed to blacklist FedEx, the people said, declining to be named because the information hasn’t been made public. A final decision would be made by senior Chinese leaders, the people said.
China’s commerce ministry announced the creation of the list in late May to target firms that the government says damage the interests of domestic companies. That followed U.S. curbs on Huawei Technologies Co. FedEx drew the ire of Chinese officials after Huawei said that documents it asked to be shipped from Japan to China were instead diverted to the U.S. without authorization.
China’s commerce ministry didn’t immediately respond to a request for comment, while Foreign Ministry spokesman Geng Shuang on Monday had no comment on whether FedEx would be placed on the list. A FedEx representative in China referred a request for comment to the company’s headquarters.
U.S. President Donald Trump and China’s Xi Jinping are scheduled to resume talks later this week at the G-20 summit in Osaka, Japan, with no signs their tit-for-tat trade war will end any time soon. Blacklisting Memphis, Tennessee-based FedEx could have a significant impact on its business in China. The commerce ministry has yet to release details about the consequences of being added to the unreliable entities list.
China’s Global Times newspaper tweeted on Sunday about the likely blacklisting.
FedEx apologized last month for delivery mistakes on the two diverted Huawei packages.
“We hope we satisfied them that this wasn’t any nefarious activity on our part,” Chief Executive Officer Fred Smith said in an interview with Fox News, in response to a question on whether FedEx would be added to China’s list. “It was just a well-intentioned FedEx teammate that made an error. We’ll just have to wait and see.”
The company is suing the U.S. Department of Commerce to block enforcement of tougher restrictions on exports and imports, saying the curbs force it “to police the contents” of millions of packages.
The global courier, scheduled to report quarterly earnings on Tuesday, says it’s being made to choose between operating under the threat of U.S. punishment and facing potential legal trouble from customers and foreign governments.
–With assistance from Yan Zhang and Miao Han.